U.S. Mint cuts costs, but pennies and nickels are still money losers

Associated Press

This undated photo from the U.S. Mint in Philadelphia shows Martha Washington on what is referred to as a nonsense test coin. The Mint has been testing different materials to find less expensive ways to make coins.

This undated photo from the U.S. Mint in Philadelphia shows Martha Washington on what is referred to as a nonsense test coin. The Mint has been testing different materials to find less expensive ways to make coins. (Associated Press)

The Mint cut cost of making pennies and nickels, but they still cost more to make than their face value

Despite lower production expenses, pennies and nickels still cost more to make than their face value -- and that added up to a loss of $90.5 million to taxpayers this year, according to a new Treasury Department report.

A penny cost the U.S. Mint 1.7 cents to produce in the fiscal year that ended Sept. 30, down from 2.4 cents in 2011 largely because of lower prices for copper.

The price of making a nickel dropped to 8.1 cents from 11.2 cents during the same period, according to a biennial report required by a 2010 law designed to modernize U.S. coin production.

"We've achieved significant savings by delivering robust cost reduction initiatives across the full spectrum of operations," said Richard Peterson, the Mint's deputy director.

It was the ninth straight year the costs to produce pennies and nickels were above the coins' face value, according to the report, which was released Friday.

The Treasury lost a combined $90.5 million on production of those coins in 2014, an improvement from $104.5 million lost in 2013.

Using alternative metal combinations could save the Mint as much as $59 million a year, the report said. But those costs could be offset by higher prices in vending machines if they need to be adjusted for different coin weights.

Industry representatives have estimated those costs could be up to $6 billion.

Studies by the Mint have determined several different metallic compositions for coins that would lower their production costs. But the report did not recommend adopting any of them until more research was completed.